7. Sarah bought a lawnmower for $320. She signed up for the buy now pay later plan at the store with the following conditions: $100 down and payments of $25 for the next 12 months. The extra cost paid by taking this plan is equivalent to what actual yearly rate of interest? A. 65% B. 85% C. 67% D. 25%

Question

Grant Howell

Mathematics

30 September, 08:57

7. Sarah bought a lawnmower for $320. She signed up for the buy now pay later plan at the store with the following conditions: $100 down and payments of $25 for the next 12 months. The extra cost paid by taking this plan is equivalent to what actual yearly rate of interest? A. 65% B. 85% C. 67% D. 25%

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Sariah Harrell · Answer 1

Amount financed

320-100=220

Total paid

100+25*12=400

Interest paid

400-320=80

Interest rate = (2yc) : (m (n+1))

I = (2*12*80) : (220 (12+1))

I = (2*12*80) : (220*13)

I=0.67*100

I=67%